[Click eStock] Shinsegae International, Meaningful Recovery Expected in Q4

NH Investment & Securities announced on the 10th that it maintains a buy rating on Shinsegae International but has lowered the target price by 8% to 22,000 KRW.

This adjustment reflects a -9% and -8% revision in the 2023 and 2024 earnings per share (EPS) estimates, respectively, due to declining profitability in the fashion sector. Additionally, considering the recent shift in consumer spending towards overseas travel, a slowdown in luxury consumption, an increase in overseas direct purchases, and intensified competition from imported brands, the valuation of related industries has weakened, leading to a reduction in the price-to-earnings ratio (PER) from 11 times to 10 times.

Jiyoon Jeong, a researcher at NH Investment & Securities, stated, "Excluding the continued impact of luxury brand contract terminations in Q2 and weak performance in the golf category causing deterioration in the fashion sector's profitability, steady results are expected across all business divisions." She added, "Through business restructuring and company-wide marketing cost reductions in the second half, a meaningful recovery is anticipated in Q4." She pointed out that the reduction in advertising and marketing expenses, expansion of Swiss Perfection distribution channels, and restructuring of the women's wear business (VoV/G-cut → transfer to Tomboy) in the second half are expected to lead to profitability recovery starting in Q4.

Meanwhile, in Q2, the company reported consolidated sales of 333.8 billion KRW (-13%) and operating profit of 18.4 billion KRW (-52%), missing the consensus operating profit estimate of 20.6 billion KRW by -11%.

This content was produced with the assistance of AI translation services.